President Barack Obama may have won another 4 years to cement the Affordable Care Act, but device makers are still "cautiously optimistic" that they can repeal the law’s 2.3% medical device tax before it hits next year, industry stakeholders said this week.
A successful White House run by former Massachusetts governor Mitt Romney could have led to the end of the healthcare reform measure entirely, but there are still opportunities to strike the provision taxing medical device sales, perhaps even before it takes effect.
The tax imposes a fee on all medical device sales, even for companies that haven’t yet made any profit. The measure is structured so that device makers will have to start making the 1st tax payments just a couple of weeks into the new year, according to AdvaMed.
Industry insiders had been looking to the “lame duck” period between election day and the seating of a new Congress as a window for pushing repeal, regardless of this week’s election results. True to their word, medtech lobbying groups are moving forward with repeal efforts with an eye toward the next few weeks.
"We are cautiously optimistic that we may have an opportunity to have the tax addressed before January 1st," AdvaMed government affairs head Juan Carlos Scott told MassDevice.com. "We knew that, regardless of the outcome of the election, presidential and Congressional, that we’d be continuing to work with both sides to try and get some action before January 1st."
AdvaMed’s strategy didn’t hinge on who took the White House, Scott added. A Romney presidency would have still meant several weeks of transition before the healthcare reform law could be addressed, but AdvaMed wants the tax out of the way before it takes effect – and it thinks it’s getting closer to reaching that goal.
"What we’ve seen is an evolution of the issue from being looked at as a healthcare reform law issue to being looked at as a tax-and-jobs issue," Scott told us. "The result of that evolution is we’ve seen growing bipartisan support for addressing the tax."
Earlier this year the U.S. House of Representatives voted 270-to-146 in favor of repealing the medical device tax, but efforts to push a similar measure have failed to muster much support in the Democrat-controlled Senate. However, that may be changing in recent months, at least according to medical device industry insiders.
"We have a bill in the U.S. Senate which, if it gets to the floor, would pass," Braun Medical CEO Caroll Neubauer told audience members at the AdvaMed 2012 Conference in Boston last month. "It would get 53 or 54 votes from outspoken Senators, including Democrats, who are going to vote for it."
AdvaMed CEO Stephen Ubl validated those sentiments, saying that the medtech industry has seen "considerable Senate support for the repeal, and it seems to be growing."
Leadership at the Medical Device Manufacturer’s Assn. was similarly optimistic that the repeal efforts were gaining momentum from both sides of the aisle.
"The election results make it clear that Americans want bipartisan solutions to the challenges confronting our economy, and that elected officials should remove barriers to innovation and job creation," MDMA president & CEO Mark Leahey told MassDevice.com via email. "Repealing the medical device tax is a perfect example where there is broad, bipartisan support in Congress to do just that, and MDMA remains laser-focused to accomplish this goal."
The next step, then, is to figure out how to get repeal back on lawmakers’ roster. There aren’t any measures yet scheduled to address the tax, but industry stakeholders are ready to spring into action as soon as an opportunity appears.
"We need to see what vehicles materialize before we know whether that opportunity exists, but we’re making ourselves ready to try and capitalize on the opportunity," Scott said.
The groups are hoping to gain favor via face-to-face interaction. Both AdvaMed and MDMA are preparing an executive "fly-in," sending medical device leaders to Capitol Hill next week to press legislators on the medical device tax.
The strategy, at least for AdvaMed, revolves around discussing jobs and corporate tax reform, rather than healthcare reform. In February the medtech lobbying group released a set of principles for modifying the U.S. tax system, hoping to attract Democratic support for striking the tax.
"We believe, candidly, that if we are successful in repositioning the device tax as a jobs and economic growth issue in the context of tax reform, that many more Democrats will view that issue in the same way and join us in the effort to repeal the tax going forward," Ubl said at the time.
That could mean focusing on the impacts the tax has had before a single penny has been collected. As an industry, medical device makers announced more than 2,000 layoffs between between July 13 and September 13 this year alone, several of them citing the medical device tax as a factor in the decision to make cuts.
"While there will continue to be passionate debates about how to spur the economy, policies such as the medical device tax have already led to job losses and cuts to research & development, and America’s workers and patients can’t afford either," Leahey told us.
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